Many people who live together as co-operative owners do not concern themselves with what sort of tenancy or title they hold with their property. Suffice it to say, these people, despite being understandably nonchalant about what may seem a trivial or tiny matter, could be at serious risk. Death, divorce, bankruptcy, etc, can have massive negative financial repercussions, and can make a messy or terrible situation even worse. Co-tenancy basically describes how property can be owned by more than one person at a time under property law. Such owners are referred to as either co-owners, co-tenants or joint tenants. There are several ways in which land can be owned: a Tenancy in Common, Joint Tenancy, or Tenancy by the Entirety, though how these individual forms of ownership are viewed and the rights governed under them may vary from state to state. The type of ownership determines the rights the individual parties hold, as well as their responsibilities, though, once again, the same rules do not apply to all jurisdictions.
“Tenancy by the Entirety” was codified in the United States in New York in 1896. It gave husbands and wives living together an equal ownership, despite them not necessarily owning land and only being tenants in an apartment. Under this form of ownership the spouses are viewed as a single person, and this “single entity” is who owns the title. This means that each spouse owns ‘one hundred percent interest’ and as such the other cannot diminish or revoke it. Thus both have equal right of possession and enjoyment during their lives as spouses. It arises only between a husband and wife when the character of their ownership is not specified in the title document(deed, etc though this may vary by jurisdiction). Upon the death of one spouse, the title is transferred into the ownership of the survivor through the Right of Survivorship. This form of tenancy is governed by the “Four Unities of a Joint Tenancy”: Unity of Time- meaning the owners must acquire the property at the same time, Unity of Title – meaning the co-owners must have the same title to the property, if a condition applies to one owner and not another, there is no unity of title and no Joint Tenancy, Unity of Interest – meaning each party owns the property equally, regardless of individual contribution to purchase price, etc, and Unity of Possession –meaning each owner has equal rights to access the entire property, along with the fifth Unity of Marriage exclusive to this tenancy form, which means the owners must be spouses. If any of these are amiss, the tenancy is not valid and may be seen as a tenancy in common.
This has one very important implication. As long as the owners exist as a married couple, their survivorship right cannot be terminated. Thus, if one spouse, let us say the husband, takes out a loan or other obligation and puts up his interest in the property as lien, the only way the creditor can act on that lien in the event of a death of one of the spouses is if the spouse that survived is the husband, who put up his interest. If the survivor is the wife, the creditor cannot act on that interest, as the creditor’s interest is extinguished since the surviving spouse takes full ownership of the title. Thus, the survivor’s ownership cannot be usurped or infringed upon. This is a great benefit, and can be used as a protective measure to ensure your spouse does not take on your burdens or lose their assets on your behalf in the event of your death. Likewise, no one spouse can sell or sever his/her interest in the property without the consent of the other.
Divorce does, quite obviously, have an effect on this ownership. Since the owners no longer exist as a married couple after a divorce, ownership is reverted to a Joint Tenancy. Joint tenancy and Tenancy by the Entirety are similar in a number of ways: firstly, both owners own a one hundred percent interest and as such the other cannot diminish or revoke it as they both have equal right of possession and enjoyment and secondly, the right of survivorship still exists here, meaning the title will be transferred fully to the survivor in the event of one owner’s death and finally, Joint Tenancy is governed by the Four Unities. The difference is that, unlike under Tenancy by Entirety, the interest of either party can be transferred to another without the other owner’s consent, breaking the Joint Tenancy. Also, a creditor can claim the interest of one party through lien, causing the property to be divided or most likely or sold, dividing the proceeds between the remaining party and the creditor, definitively ending the tenancy.
If the spouses, who own a property in Tenancy by Entirety, divorce, they may also choose to enter a “Tenancy in Common.” This can also be done if one spouse in a Tenancy by Entirety, after a divorce, while having an interest in the resulting Joint Tenancy, transfers all their interests to a third party, breaking and ending the Joint Tenancy. A Tenancy in Common may be seen in simple terms as the opposite of a Tenancy by the Entirety. Here both owners are deemed to hold a title to an undivided interest in the property that each may do with what he desires. There is no right of survivorship, meaning if either owner dies, the property is transferred to an heir, or beneficiary. Furthermore, nothing exists to stop one party from transferring his/her share entirely to a third party, and as such one could presumably find a stranger owning a portion of the dwelling and claiming interest and thus a right to reside there without much warning, which could be rather uncomfortable and unwanted. As above with the Joint Tenancy, creditors can claim the interest of one party put up for lien, and lead to a forced splitting or selling of the property and division of the proceeds.
There are many kinds of co-ownership and knowing what type of tenancy you and your spouse share is a very important issue. It can mean the difference between losing everything if your in-debt spouse dies before paying his/her loans fully, or having an interest in the property being given to a stranger if there is a falling out in the relationship. The different forms of ownership might seem confusing, but knowing what they are, and what you are getting yourself into when you agree to them is imperative to being prepared for the contingencies of the un-knowable future. Loss is difficult, but even worse than suffering loss, whether through divorce or death, is having to deal with losing your assets or having to sell your assets in order to manage a debt while grieving. Always be as prepared as possible, and know what is best for both you and your spouse. Though Tenancy by Entirety is not available in all jurisdictions, knowing whether it applies to you or affects you or not can be a simple process that can save you much headache and pain in the future.